Marshalls plc 2017 Half Year Results Review and Outlook Delivering the 2020 Strategy
Agenda Delivering the 2020 Strategy • Highlights • Financial Performance • The Market • Find out more online Delivering the 2020 Strategy www.marshalls.co.uk • Public Sector and Commercial • Domestic Find us on Facebook • Smaller UK Businesses MarshallsGroup • 2020 Strategy Update • New Product Development Follow us on Twitter @MarshallsGroup • Self Help Investment • Acquisition Strategy Follow us on LinkedIn • Summary Marshalls • Questions Follow us on YouTube MarshallsTV 2 Marshalls plc 2017 Half Year Results Review and Outlook
Delivering the 2020 Strategy Highlights Increase HY 2017 HY 2016 % Revenue £219.1m £202.4m 8 EBITDA £36.7m £32.4m 13 Operating profit £29.8m £26.0m 15 Profit before tax £29.1m £25.1m 16 Basic EPS 12.04p 10.36p 16 Interim dividend 3.40p 2.90p 17 19.9% ↑380 basis points ROCE 23.7% Net cash / (debt) £1.2m (£8.8m) Net cash / (debt) – before dividend £18.6m (£8.8m) 3 Marshalls plc 2017 Half Year Results Review and Outlook
Financial Performance Half Year 2017 Results
Delivering the 2020 Strategy Revenue Growth 250 15.8 219.1 2.7 202.4 200 (1.8) 150 £'m 100 50 0 2016 Revenue Landscape Smaller UK International 2017 Revenue Products Businesses 5 Marshalls plc 2017 Half Year Results Review and Outlook
Delivering the 2020 Strategy Revenue Analysis Revenue analysis: end market Revenue analysis: business area ↑25% ↑25% 6% 6% ↓4% Public Sector & Commercial 20% Landscape Products UK Domestic ↑17% Smaller UK Businesses 34% International International 60% 74% ↑11% ↑3% Domestic revenue has grown from 32% to 34% of the Group 6 Marshalls plc 2017 Half Year Results Review and Outlook
Delivering the 2020 Strategy Margin Reconciliation Revenue Operating profit Impact on margin £m £m % HY 2016 202.4 26.0 12.8 Landscape Products 15.8 3.4 0.7 Smaller UK Businesses (1.8) 0.1 0.1 International 2.7 0.3 - HY 2017 219.1 29.8 13.6 7 Marshalls plc 2017 Half Year Results Review and Outlook
Delivering the 2020 Strategy Cash Flow from Operating Activities HY 2017 HY 2016 £m £m Cash inflow arising from: Operating profit 29.8 26.0 Depreciation and amortisation 6.9 6.4 EBITDA 36.7 32.4 Net financial expenses paid (0.5) (0.6) Taxation paid (5.7) (3.7) Net gain on sale of property, plant and equipment (0.9) (0.1) Receivables / payables (9.6) (18.0) Inventory (1.5) (1.3) Equity settled share-based payments and other items 0.7 0.6 Net cash flow from operating activities 19.2 9.3 8 Marshalls plc 2017 Half Year Results Review and Outlook
Delivering the 2020 Strategy Cash Flow HY 2017 HY 2016 £m £m Net cash flow from operating activities 19.2 9.3 Capital expenditure (8.7) (6.1) Net proceeds from sale of surplus assets 4.2 0.5 Dividends paid (17.4) - Payments to acquire own shares (1.1) (1.2) Sub-total (3.8) 2.5 Finance leases / exchange differences (0.4) 0.2 Movement in net debt (4.2) 2.7 Net cash / (debt) at 1 January 5.4 (11.5) Net cash / (debt) at 30 June 1.2 (8.8) 9 Marshalls plc 2017 Half Year Results Review and Outlook
Delivering the 2020 Strategy Strong Track Record of Capital Discipline HY HY HY HY 2017 2016 2015 2014 Debtor days 34 34 36 42 Creditor days 52 51 51 53 Inventory turn (times per annum) 3.3 3.2 3.0 2.9 1.6 Liquidity ratio 1.5 1.6 1.5 (current assets: current liabilities) ROCE 23.7% 19.9% 15.2% 10.1% Gearing N/A 4.3% 17.9% 28.8% Net cash / (debt) £1.2m £(8.8)m £(32.9)m £(50.9)m Net assets £222.6m £204.9m £184.0m £177.0m 10 Marshalls plc 2017 Half Year Results Review and Outlook
Delivering the 2020 Strategy Significant Borrowing Facilities Bank Facility Headroom Cumulative Facility Facility £m £m 180 Expiry date 160 Committed facilities: 140 120 Q3 2021 20 20 100 Q3 2020 20 40 80 Q3 2019 20 60 60 Q3 2018 20 80 40 On demand facilities: 20 -20 Available all year 15 95 0 -20 Seasonal (February to August inclusive) 10 105 Committed On demand Seasonal Net debt • Bank facilities actively managed • Comfortable facilities and headroom • Balance of committed and uncommitted facilities • Good comfort against covenants 11 Marshalls plc 2017 Half Year Results Review and Outlook
Delivering the 2020 Strategy Capital Allocation Policy 2 1 3 4 5 R&D Organic Ordinary Selective Supplementary NPD growth dividends acquisitions dividends Capital investment in Increase research Maintain dividend Target selective Supplementary growth projects. and development and cover of 2 times bolt-on acquisition dividends when Target £23m in 2017 new product earnings over the opportunities in appropriate. development business cycle Water Management, Discretionary and Street Furniture and non-recurring Minerals 12 Marshalls plc 2017 Half Year Results Review and Outlook
Delivering the 2020 Strategy Bank Debt Capacity • Continued strong operating cash flow • £1.2 million net cash at 30 June 2017 (2016: £8.8 million net debt) • Final and supplementary dividends of £17.4 million paid on 30 June 2017 • On a comparable (pre-dividend) basis – cash balance of £18.6 million • Bank debt capacity of £105 million • Significant capacity to fund organic investment plans and selective acquisitions 13 Marshalls plc 2017 Half Year Results Review and Outlook
Delivering the 2020 Strategy Pensions Balance Sheet 20 • Company contributions to DB Scheme reduced to zero 10 under agreed Recovery Plan 0 • HYE 2017 surplus of £3.6 million (YE 2016: surplus of -10 £4.3 million) -20 Income Statement • Net service cost: £0.2 million debit (2016: £0.2 million -30 debit) -40 -50 £m Defined Contribution Scheme • New DC Scheme within a Master Trust operated by Aviva / Friends Life Accounting valuation • Much improved proposition for the majority of Group employees Actuarial valuation: Formal 14 Marshalls plc 2017 Half Year Results Review and Outlook
Delivering the 2020 Strategy Dividends • Progressive ordinary dividend policy 14.00 • 2017 interim dividend 3.40p (17% up) 12.00 • 2x cover 3.00 10.00 • Supplementary dividend: discretionary and non-recurring 8.00 2.00 6.00 5.80 4.75 4.00 4.00 3.50 2.00 3.40 2.90 2.25 2.00 1.75 0.00 2013 2014 2015 2016 2017 Interim Final Supplementary 15 Marshalls plc 2017 Half Year Results Review and Outlook
The Market Half Year 2017 Results
Delivering the 2020 Strategy CPA Total Construction Output Forecasts (% growth) 17 Marshalls plc 2017 Half Year Results Review and Outlook
The Public Sector & Commercial Market Half Year 2017 Results
Delivering the 2020 Strategy ABI Lead Indicator Hard Landscaping 19 Marshalls plc 2017 Half Year Results Review and Outlook
Delivering the 2020 Strategy ABI Hard Landscape Scapes 20 Marshalls plc 2017 Half Year Results Review and Outlook
Delivering the 2020 Strategy Commercial Market Environment Through to 2020 21 Marshalls plc 2017 Half Year Results Review and Outlook
Delivering the 2020 Strategy Housing – Continued Demand Historical Government Statistics - Dwellings Completed MAT Recent NHBC Completions Overlaid 300000 Government Target 250000 200000 150000 100000 Local Authorities MAT Housing Associations MAT 50000 Private Enterprise MAT Government Target 0 1978 Q4 1979 Q4 1980 Q4 1981 Q4 1982 Q4 1983 Q4 1984 Q4 1985 Q4 1986 Q4 1987 Q4 1988 Q4 1989 Q4 1990 Q4 1991 Q4 1992 Q4 1993 Q4 1994 Q4 1995 Q4 1996 Q4 1997 Q4 1998 Q4 1999 Q4 2000 Q4 2001 Q4 2002 Q4 2003 Q4 2004 Q4 2005 Q4 2006 Q4 2007 Q4 2008 Q4 2009 Q4 2010 Q4 2011 Q4 2012 Q4 2013 Q4 2014 Q4 2015 Q4 2016 Q4 22 Marshalls plc 2017 Half Year Results Review and Outlook
Delivering the 2020 Strategy Housing – New Product Launch: Keypave 23 Marshalls plc 2017 Half Year Results Review and Outlook
Delivering the 2020 Strategy Housing – New Product Launch: Urbex July Launch 24 Marshalls plc 2017 Half Year Results Review and Outlook
Delivering the 2020 Strategy Roads – Water Management 25 Marshalls plc 2017 Half Year Results Review and Outlook
Delivering the 2020 Strategy Rail 26 Marshalls plc 2017 Half Year Results Review and Outlook
Domestic Householders Half Year 2017 Results
Delivering the 2020 Strategy Consumer Intentions 28 Marshalls plc 2017 Half Year Results Review and Outlook
Delivering the 2020 Strategy Housing Transactions 29 Marshalls plc 2017 Half Year Results Review and Outlook
Delivering the 2020 Strategy Installer Order Books 30 Marshalls plc 2017 Half Year Results Review and Outlook
Delivering the 2020 Strategy Pension Release Average Cost Average Cost of Driveway of Patio installed installed £6,000 £5,000 31 Marshalls plc 2017 Half Year Results Review and Outlook
Delivering the 2020 Strategy The Marshalls Register 32 Marshalls plc 2017 Half Year Results Review and Outlook
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